Post Session: Quick Review

After trading higher in previous sessions, Indices turned somber on Tuesday ahead of F&O expiry. Traders sentiment looked cautious from the very beginning as the U.S. Senate Banking Committee due to hold a hearing on the recent banking sector turmoil later in the day. Markets participants decided to sell out riskier assets in Tuesday’s trade due to ongoing banking crisis. Besides, traders would be looking forward to macroeconomic data, both domestic and in the U.S. GDP and jobs data from the world's largest economy is due on March 30, which could provide insight into the impact of U.S. Federal Reserve's monetary policy action on inflation and growth. However, investors were hopeful that the banking crisis will be contained after a buyout deal for the failed Silicon Valley Bank. Traders ignored U.S. regulators’ statement that they would backstop a deal for regional lender First Citizens BancShares to acquire failed Silicon Valley Bank, triggering an estimated $20 billion hit to a government-run insurance fund. Global markets failed to cheer Indian markets during the session. Major losses in IT counters forced the markets to hang out the day below neutral line.

Markets made positive start and maintained gains for little time with SBI Research in its latest Ecowrap report stating that the Reserve Bank of India (RBI) is expected to pause their interest rate hike and the current 6.5 per cent repo rate could be the terminal rate for now. However, soon markets slipped lower in volatile session, as sentiments got hit after a sharp rise in oil prices overnight. Markets wavered between gains and losses in afternoon session with investors taking their position around the flat line as ongoing development in banking crisis troubled them to take a firm one-sided move. Finally, both Sensex and Nifty concluded the session with minor cuts. 

On the global front, European markets were trading higher lifted by commodity and banking shares, after a buyout deal for failed Silicon Valley Bank raised hopes that the banking crisis would be contained. Asian markets ended mostly in green, as concerns over the banking crisis eased and China's top leaders pledged to keep embracing foreign capital despite economic and geopolitical headwinds. Back home, S&P Global Ratings has kept its forecast for India's Gross domestic product (GDP) growth unchanged at 6 per cent in the fiscal year starting April 1, before rising to 6.9 per cent in the following year. In the quarterly economic update for Asia-Pacific, S&P saw inflation rate easing to 5 per cent in 2023-24 fiscal, from 6.8 per cent in the current financial year.

The BSE Sensex ended at 57,613.72, down by 40.14 points or 0.07% after trading in a range of 57,494.91 and 57,949.45. There were 11 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 0.42%, while Small cap index was down by 0.79%. (Provisional)

The only gaining sectoral indices on the BSE were Bankex up by 0.33% and Metal was up by 0.24%, while Telecom down by 1.60%, Realty down by 1.17%, Utilities down by 1.06%, Power down by 0.96% and Oil & Gas was down by 0.95% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Indusind Bank up by 2.13%, Power Grid up by 1.20%, HDFC Bank up by 1.06%, ICICI Bank up by 1.04% and NTPC up by 0.61%. On the flip side, Tech Mahindra down by 2.92%, Tata Motors down by 2.29%, Bharti Airtel down by 1.94%, Wipro down by 1.37% and Bajaj Finserv down by 1.23% were the top losers. (Provisional)

Meanwhile, SBI Research in its latest Ecowrap report has said that the Reserve Bank of India (RBI) is likely to pause their interest rate hike and the current 6.5 per cent repo rate could be the terminal rate for now. The repo rate is the interest rate at which the RBI lends money to all commercial banks. The next monetary policy meeting is scheduled for the first week of April 2023. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. In early 2020 when Covid hit the world, the repo rate was 4 per cent.

The report asserted that the RBI has enough reasons to pause the repo rate hike in the April meeting. It said ‘There are concerns of a material slowdown in the affordable housing loan market and financial stability concerns taking centre stage. While concerns on sticky core inflation is justified, it may be noted that average core inflation is at 5.8 per cent over the last decade and it is almost unlikely that core inflation could decline materially to 5.5 per cent and below as post-pandemic shifts in expenditure on health and education and the sticky component of transport inflation with fuel prices staying at elevated levels will act as the constraint. By this logic, RBI may then have to go for more rounds of rate hikes’.

On India's inflation, the Ecowrap report forecast March and April to be 5.5-5.6 per cent and 4.7-4.8 per cent. It said ‘Thus, the RBI will have a delicate balancing job of either looking forward to the June meeting with clear signs of inflation trending downwards or looking backwards at the Jan and Feb prints in April policy. Thus, it will be a delicate choice (for RBI)’. Not just India, US monetary policy committee too is on an interest hike spree in the fight against inflation. SBI Research said ‘Fed rate hikes could be smaller in magnitude, and one last in May policy of 25 bps’. It added ‘The challenge is now to decouple from Fed. But the good thing is that a dovish Fed means soft dollar and thus lower depreciation risk for the Indian rupee in the short to medium term’.

The CNX Nifty ended at 16,951.70, down by 34.00 points or 0.20% after trading in a range of 16,913.75 and 17,061.75. There were 18 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indusind Bank up by 2.30%, UPL up by 2.00%, Dr. Reddy's Lab up by 0.92%, Power Grid up by 0.91% and HDFC Bank up by 0.81%. On the flip side, Adani Enterprises down by 7.09%, Adani Ports down by 5.67%, Tech Mahindra down by 2.96%, Hero MotoCorp down by 2.56% and Tata Motors down by 2.54% were the top losers. (Provisional)

European markets were trading higher, UK’s FTSE 100 increased 13.23 points or 0.18% to 7,485.00, France’s CAC rose 6.43 points or 0.09% to 7,084.70 and Germany’s DAX was up by 15.2 points or 0.1% to 15,142.88.

Asian markets settled mostly higher on Tuesday on easing banking woes after Regional US lender First Citizens BancShares said it would acquire Silicon Valley Bank's deposits and loans as well as certain other assets from the Federal Deposit Insurance Corporation. Japanese shares gained slightly after Japan’s cabinet approved the use of some funds from the fiscal 2022 budget for measures to soften the impact of inflation. However, Chinese shares declined after reports that the Chinese government will probe over 30 state-owned firms to weed out corruption.